This week, Ladbrokes bookmakers announced an increase in what has been called "highbrow" or "cultural" betting. The firm's Alex Donohue says: "This kind of betting has been around for a while, but it's burgeoning, and stakes are rising." He gave me some examples: betting on the Man Booker prize with Ladbrokes is up from £4,000 in 2005 to £15,000 so far this year. Betting on the Nobel prize for literature is up from just over £1,000 in 2005 to approaching £20,000. I asked about the Nobel peace prize, because, having long considered Chelsea (formerly Bradley) Manning a shoo-in, I now think Putin's in with a shout, after his impressive showing over Syria, but Donohue says: "We don't do the Peace prize. I think we probably should." I told him I heartily agreed. After all, if the 2.15 at Haydock Park justifies running a book, then so does the quest for world peace.

Taken together with betting on somewhat less highbrow events such as The X Factor, or who will be the next James Bond (the favourite is Michael Fassbender, but a German Bond? I don't see it), such "special" betting is now worth £3m a year to Ladbrokes, and is on the increase with all bookmakers.

This is the season of awards, and so a propitious time for the punter with the culture section in his or her pocket, rather than the Racing Post. I myself had been thinking of having a bet on the Booker. I fancy Jim Crace, who at 5-2 is the favourite in a fairly open field. He's put a gun to the judges' heads by announcing that his contender will be his last novel. Then there's its title, Harvest, invoking the idea of a deserved reward for much hard labour. And in the Mercury prize, whose shortlist was announced this week (and on which betting is also strongly up) David Bowie looks worth a punt at 9-2 for the same valedictory reasons.

I walked into my local betting shop, which happens to be a William Hill. Shouting over the commentary on a dog race, I said to the clerk: "I'd like to put £5 on Jim Crace to win the Man Booker prize." After a moment's hesitation, he said: "Right." He then turned frowningly to his computer in search of the odds. I could see him ploughing through all the more obscure options. Golf, I read over his shoulder, then Gaelic football. "There's a hot favourite, is there?" he asked, still searching. "Crace is the favourite," I said. "The second favourite's Eleanor Catton, and I think you're going to be taking big money on her as well." "Oh yes?" said the clerk, who'd now clicked on hurling. "Yes," I said, "her book's 823 pages, so if length is a factor, she's laughing." "Tell you what," said the clerk, turning round from his screen. "Why don't you try our website?"

Eleanor Catton is second favourite to win the Man Booker prize with her 823-page novel, The Luminaries, behind the favourite, Jim Crace. The odds of her winning are 4-1. Photograph: Linda Nylind for the Guardian Linda Nylind/Guardian

To be fair to William Hill, it was they who pioneered highbrow betting, as their media projects director, Graham Sharpe, indignantly points out. "We call it our culture file. My idea was always that we should broaden the range of things that people can bet on. I mean, every man has his price. We've taken bets on the Booker since the start of the prize. We're the official bookmakers for the Mercury. We've been taking bets on the World Chess Championship since the days of Fischer-Spassky … the Turner prize, the RIBA Stirling prize for architecture ... that science book prize."

I asked him about the calculation of odds. You have a clear index of form with horses, but what about the novels of the Booker? "For many years," says Sharpe, "I prided myself on being the only person at the award ceremony apart from the judges who'd read every book on the shortlist." So you've read every book on this year's shortlist, I shot back, including The Luminaries by Eleanor Catton, which is over 800 pages long? Silence down the telephone line. "In recent years," says Sharpe, "I have taken the view that you didn't need to ride Red Rum to know he had a good chance of winning the Grand National … So it's a matter of looking at the critical response." Sharpe himself used to set the odds for the Mercury after listening to the entire shortlist. But pop music has now left Sharpe (whose favourite group is the Pretty Things) behind, so he hands the duty to a younger colleague.

Chelsea (formerly Bradley) Manning … could be a good tip for the Nobel peace prize. Photograph: Patrick Semansky/AP

Highbrow betting remains a minority pursuit. Twenty thousand pounds taken by Ladbrokes on the Nobel prize in literature compares with hundreds of thousands that might be staked on a big Premier League game, and it is football rather than culture that is displacing horse racing in the bookies.

My 84-year-old father, a horse racing gambler since the age of 12, says: "The man ahead of me in the queue is always betting on football these days." He is nostalgic for the days when betting was run by hardened criminals. "If you went into a betting shop you ran the risk of being rounded up by the police, arrested and fined. But the bookie would pay your fine, when you saw him again." He has always savoured the Dickensian roughness of betting shops, although they're not so rough these days. "The stools have cushions on them, and you can usually buy a can of Sprite or a coffee from a machine. But I don't see the Booker prize types going in there."

But perhaps that doesn't matter. The fact that about half of the bets taken by the major bookmakers are placed online might have helped the rise of highbrow gambling. Another factor is hype. It's no accident that I had a conversation about the Man Booker in the betting shop after the clerk had asked whether there was a hot favourite. That's the easiest way into discussion of these things, as the bookmakers and the event organisers are well aware. The firm Paddy Power, who are known to take bets on almost anything, employed retired basketball player Dennis Rodman to promote betting on the Papal election. The eye-catching deal was that punters would have their stakes returned if the winning pope was black – or something like that. (Rodman, incidentally is in North Korea at the time of writing, promoting basketball for Paddy Power, and possibly also trying to secure the release of an American-Korean Christian Evangelist called Kenneth Bae. Rodman said: "I'm calling on the Supreme Leader of North Korea or, as I call him, Kim, to do me a solid and cut Kenneth Bae loose.")

The appeal of betting on such socially important matters as the next pope is that you can be compensated for any philosophical disappointment with a bit of cash in hand. For example, let's say that EL James, author of Fifty Shades of Grey, won the Nobel prize for literature – and you can get 500-1 on this with Ladbrokes. Obviously, it would represent the end of civilisation as we know it, but you might remain relatively sanguine if you'd had a tenner on her.

The more I think of it, the more I approve of highbrow betting. It introduces a welcome trenchancy into subjects often shrouded in misty rhetoric. If, for example, a reviewer writes (as one reviewer has written), that the Mercury-nominated album Holy Fire will blow the group Foals "into the stratosphere". The gimlet-eyed punter can simply enquire: "You'd put money on that, would you?" When Barack Obama was up for re-election, I noticed my eldest son – just turned 18 – reading a lot about the election in the paper. He then substantially increased his life savings by having a late bet on Obama. I thought that was pretty cool.

I finally did have a bet on the Booker. I did it in a Ladbrokes. The clerk wrote out the ticket by hand: "Jim Crace, Booker." This was obviously all something of a novelty. He then added, "To win," and underlined it, but even he wasn't convinced, so he printed one out of a machine, and this was much more like it. "Event: Man Booker prize. Market: prize winner. Selection: Jim Crace – Harvest. Odds: 5-2. Stake per line: £5.00." Scanning this businesslike document, I recalled a characteristic phrase of my father's. When, as a boy, I played cards with him, he'd put a handful of change on the table, and urge me to upend my money box: "Let's make it interesting," he'd say.

Andrew Martin's latest novel, Night Train to Jamalpur, is published on November 6.